Record silver rally spurs cross-border smuggling from Hong Kong to Mainland

[HONG KONG] Hong Kong customs officers inspecting a car leaving for the Chinese mainland this week discovered a cargo heavier than the typical road-trip snacks: 219 kilograms of silver hidden inside tins of Danish butter cookies.

The seizure at the Heung Yuen Wai Control Point on Jan. 27 highlights how a frantic rally in precious metals in early 2026 is reshaping criminal enterprise and rattling supply chains. With London spot silver prices surging more than 60 per cent since the start of the year to record highs, shortages and price gaps are fuelling arbitrage attempts across the border.

Customs officials intercepted the private vehicle at the border crossing connecting to Shenzhen’s Liantang port. During a routine inspection, officers noticed irregularities in the trunk, where a stash of what appeared to be ordinary food products was stored.

Inside at least 10 tins of Danish butter cookies — famous for their blue circular packaging — as well as six milk powder cans and nine egg roll containers, officers found the silver cut into blocks and wrapped in plastic. One cookie tin alone contained three large chunks of the metal. Authorities estimated the market value of the haul at HK$6.1 million (S$992,015).

Hong Kong is a free port, exempting most imports and exports from tariffs and value-added tax. Smuggling precious metals into the Chinese mainland allows criminals to evade stiff import duties, VAT, and corporate income taxes.

Two men, the 46-year-old driver and a 40-year-old passenger, were arrested and charged with attempting to export unmanifested cargo. They were scheduled to appear at the Fanling Magistrates’ Courts on Jan. 29. Under Hong Kong’s Import and Export Ordinance, smuggling is a serious offence carrying a maximum penalty of a HK$2 million fine and seven years in prison.

The smuggling attempt is the latest symptom of a market in overdrive. While gold has long been a favourite for illicit cross-border transit, silver has taken centre stage in 2026. The metal posted gains of more than 140 per cent throughout 2025 and has continued an explosive trajectory this January. By Thursday, London spot silver had breached US$110 an ounce.

Analysts attribute the parabolic rise to a perfect storm of supply constraints and soaring industrial demand, particularly from the photovoltaic sector for solar panels. Compounding the squeeze is heightened geopolitical instability, which has burnished silver’s appeal as a safe-haven asset alongside gold. Central bank purchases have further tightened availability, creating a supply-demand deficit that has left industrial users scrambling.

This was not the first recent intercept of precious metals by Hong Kong authorities. In October 2025, customs officers at Hong Kong International Airport solved two airfreight smuggling cases, seizing 60 kilograms of gold-silver alloy and 80 kilograms of suspected gold destined for Japan and Vietnam, valued at approximately HK$100 million. CAIXIN GLOBAL